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Tax reform in Argentina: in search of sustainable measures

As we have highlighted in previous articles on reforms to labor and social security legislation in Argentina, the reform package proposed by the local government is completed with a tax reform. Our expert offers a summary of what is proposed.

Recently, the Argentinian government presented the tax reform project before the National Congress which includes, among several topics and modifications, the Income Tax, the Value Added Tax and the Tax Criminal Regime. The proposed reform will be gradual so that the changes are predictable and the measures applied are sustainable.

Some of the objectives are the following:

Promote investment, competitiveness and quality employment.

Move towards a more balanced, efficient and modern tax system.

Drastically reduce tax evasion.

Comply with fiscal goals.

Advance towards development.

It also proposes measures to reduce internal taxes for electronic products and mid-range vehicles, and an increase for certain high-end products.

Changes in tax regulations

Income Tax

In relation to the Income Tax of legal persons, a gradual reduction until 2022 is proposed from 35% to 25% on the undistributed profits.

In the case of natural persons, the provision of labour clothes and the payment of training courses or specialization of employees will be covered by the tax, if they are essential for the performance and development of the career of the employee. In the case of self-employed workers, the special tax deduction is doubled.

The so-called "Check Tax" will be progressively computed as payment to the Income Tax account.

Value Added Tax

The Value Added Tax is intended to establish a refund regime for companies that have made investments and have not recovered it in 6 months.

Online services, such as Netflix or Spotify, will pay VAT since digital services provided abroad that can be used in the country will be taxed. The books are exempted.

Tax on the Transfer of Real Estate and Internal Taxes

The Real Estate Transfer Tax will be replaced by a 15% tax on the capital gain for the sale of real estate, except in the case of a dwelling.

Changes are expected in the internal taxes for cell phones, televisions and monitors, which is reduced to 0% for the province of Tierra del Fuego. For cell phone services, the tax will be 5%.

It is also reduced to 0% in the case of mid-range cars and motorcycles, while for aircraft, high-end motorcycles and boats, it will be 20%. In the case of whiskey, cognac and other white drinks, it will apply 29%, while for soft drinks with added sugars will be 17%.

Others

A 15% tax is established on the financial income for assets in foreign or indexed currencies, and 5% for assets in local currency.

On the other hand, according to the proposed amendment to the Anti-evasion law, the electronic address will be mandatory.

With respect to the Criminal Tax Law, the amounts of penalties for simple evasion will amount to $1,000,000 [current $400,000] and for the aggravated to $10,000,000 [current $4,000,000]. For simple pension evasion, the punishable floor goes from $80,000 to $200,000 and the aggravated floor from $400,000 to $1,000,000.

Get help from experts

The experts at TMF Argentina are up to date with the changes in local laws regulations and are ready to help you identify the possible impact to your business. For more information on tax matters in Argentina, or to know how we can help you, contact us.

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